AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2021 (3) TMI 1389
X X X X Extracts X X X X
X X X X Extracts X X X X
....mport these goods. Sixteen containers arrived at ICD, Tughlakabad, New Delhi during the period from March 2011 to June 2011 and Bills of Entry were filed but the goods were not cleared even after expiry of the period of thirty days stipulated under Section 48 of the Customs Act 1962 Customs Act. Seven show cause notices were issued to the respondent to show cause as to why the goods should not be confiscated under section 111(d) of the Customs Act and penalty should not be imposed under section 112 of the Customs Act. A reply was filed by the respondent stating therein that it was not in a position to clear the goods. By an order dated 26.11.2012, the Additional Commissioner of Customs ordered confiscation of the imported goods contained in the sixteen containers valued at Rs. 59,07,768/- under section 111(d) of the Customs Act. An option was, however given to the respondent to redeem the goods on payment of redemption fine of Rs. 20 lakhs. A penalty of Rs. 10 lakhs was also imposed upon the respondent under section 112 of the Customs Act. 3. Feeling aggrieved, an appeal was filed by the respondent. The appeal was initially disposed of on 20.08.2013 as not maintainable since it ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....** 5.7 On perusal of CBES instruction under F. No. 711/4/2006-CUS(AS) dated 14.02.2006 regarding requirement of issuing Notice to the owner of goods- provisions of Section 150 of the Customs Act, 1962 wherein it is clarified that where any goods, not being confiscated goods, are to be sold under any provision of the Customs Act, they shall be sold by public auction or by tender or in any other manner after notice to the owner of the goods and further clarified that the requirement to issue notice to the owner of the goods shall also obtain in case of goods that have been confiscated but in respect of which all appeal/legal remedies have not been exhausted by the owner of the goods. 5.8 I find that the Department failed to adhere to the instructions of the CBEC as they proceeded with the auction despite the fact the appeal was pending before the undersigned and the appellant had not exhausted further channel of appeal/legal remedies, therefore, the action of the department was not in accordance with the instructions of the Board. 5.9 In view of the above discussion and relying upon the various judicial pronouncements, cited above, I hold that the imported ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....earing the appeal, in view of the aforesaid conflicting decisions, referred the matter to a Larger Bench and the observations contained in paragraph 7 of the decision are reproduced below: "7. Thus after carefully examining the rival arguments, though we are of the considered view that once confiscation of the goods is held to be valid in any proceedings, the property in the goods is vested in the Government and the sale proceeds being the total consideration of such property, as a natural corollary such 6 CUS/MISC/50665 & 50732 of 2019 sale proceeds will represent the confiscated goods. Once the confiscated goods allowed to the redeemed on a redemption fine, the sale proceeds which represent the goods, will be paid to the importer only after deduction of such fine. Thus, the redemption fine is to be charged from the importer while releasing the goods, the same also needs to be recovered from the sale proceeds which represent the consideration of the property. However, in view of the contradicting decisions on the matter at hand by the benches of the Tribunal, we refer the matter to Larger Bench on the issue "whether the redemption fine and penalty, if any, imposed in the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ue for the goods would include the cost of the goods, the duty and the redemption fine. This redemption fine cannot be again charged from the importer. In support of this contention, reliance has been placed upon the decision of the Supreme Court in Commissioner of Customs (Import) vs. Stoneman Marble Industries 2011 (264) E.L.T. 3 (S.C.); and (v) The Department cannot auction the goods without verifying whether the importer has filed an appeal against the order of the adjudicating authority. In support of this contention reliance has been placed on the decision of the Bombay High Court in Kailash Ribbon Factory Ltd. vs. Commissioner of Cus. & C. Ex. New Delhi 2002 (143) E.L.T. 60 (Del.). Reliance has also been placed on the Instructions dated 14.02.2016 issued by the Ministry of Finance. 11. The submissions advanced by the learned Authorized Representative of the Department and the learned counsel appearing for the respondents have been considered. 12. The records indicate that the sixteen containers arrived ICD Tuglakabad. Section 48 of the Customs Act requires that they should be cleared within 30 days from the date of the unloading, otherwise they can be sold by ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in lieu of confiscation (1) Whenever confiscation of any goods is authorised by this Act, the officer adjudging it may, in the case of any goods, the importation or exportation whereof is prohibited under this Act or under any other law for the time being in force, and shall, in the case of any other goods, give to the owner of the goods or, where such owner is not known, the person from whose possession or custody such goods have been seized, an option to pay in lieu of confiscation such fine as the said officer thinks fit: PROVIDED that where the proceedings are deemed to be concluded under the proviso to sub-section (2) of section 28 or under clause (i) of sub-section (6) of that section in respect of the goods which are not prohibited or restricted, the provisions of this section shall not apply: PROVIDED FURTHER that, without prejudice to the provisions of the proviso to sub-section (2) of section 115, such fine shall not exceed the market price of the goods confiscated, less in the case of imported goods the duty chargeable thereon. (2) Where any fine in lieu of confiscation of goods is imposed under sub-section (1), the owner of such good....
X X X X Extracts X X X X
X X X X Extracts X X X X
....oods have been auctioned, the goods get replaced by the sale proceeds, and can be redeemed on payment of redemption fine. 21. This submission of the learned Authorised Representative of the Department deserves acceptance. If the reasoning given by the Commissioner (Appeals) is accepted, then the best course for a person to adopt after the goods are confiscated is to keep quiet till such time as the goods are auctioned because in that case redemption fine cannot be imposed. Obviously, the sale proceeds replace the goods and there can possibly be no change in the consequences that would flow from the order of confiscation. The Commissioner (Appeals), therefore, was not justified in holding that no redemption fine can be imposed after the "goods" have been sold because only the "goods" can be redeemed and not the sale proceeds. 22. What is important to notice is that the Commissioner (Appeals) has also ordered for payment of the entire sale proceeds to the respondent after deduction of the penalty amount. Section 126 of the Customs Act provides that where any goods are confiscated under the Act, such goods shall thereupon vest in the Central Government. The respondent did not ma....